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(Sharecast News) - Shares in Florida-based insulation and commercial roofing group TopBuild jumped on Monday after its board unanimously approved a takeover by larger peer QXO for $17bn, making the combined company the second largest publicly traded building products distributor across North America.
Connecticut-based QXO said the deal will significantly expand its scale and capabilities across the building products value chain, and be "immediately and substantially" accretive to the bottom line.
"The combination will bring together QXO's leading positions in roofing, waterproofing, lumber-related building materials, and associated products with TopBuild's insulation capabilities, creating a higher-margin business with expansive value-added offerings for customers," QXO said.
It comes hot on the heels of QXO's acquisition of Kodiak Building Partners, the lumber, trusses and building materials outfit, for $2.3bn which completed on 1 April.
The enlarged group is expected to generate more than $18bn in revenues and $2bn in adjusted EBITDA, operating in an addressable market of more than $300bn, QXO said.
Directors of both companies have approved the deal, which values TopBuild at $505 a share, a 19.8% premium to its 60-day volume-weighted average price and a 23.1% premium to Friday's closing pricer of $410.31.
"This is a significant acquisition that's highly complementary to our existing business. By adding TopBuild to our portfolio, we'll be able to deliver more value to our customers and increase our presence in key markets throughout North America," said QXO chief executive Brad Jacobs in an internal memo to employees.
"Plus, it'll advance our goal of growing QXO into a $50 billion company within the decade," he said.
QXO shares were down 8% at $23.03 by 1611 BST, while TopBuild was 16.3% higher at $476.96.
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